Warning lights on the American labor market, faint for months, are now flashing brighter. Fresh figures released Thursday suggest the slowdown in hiring that began this summer may be hardening into something more worrisome.
New claims for unemployment benefits rose to their highest level in 11 weeks. Private businesses sharply curbed hiring in July. And layoff announcements last month reached their worst August level since the pandemic — and before that, the Great Recession.
“The labor market is showing signs of cracking,” said Heather Long, senior economist at Navy Federal Credit Union. “It’s not a red siren alarm yet, but the signs keep growing that businesses are starting to cut workers.”
All eyes now turn to Friday’s government jobs report, expected to show another month of anemic gains. Economists forecast a net increase of about 80,000 jobs in August — modestly higher than July’s 73,000 but still far below the 115,000 originally projected.
The July numbers were sobering. Revisions slashed earlier estimates for May and June by a combined quarter of a million jobs. Taken together, the three-month average fell to just 35,000 jobs, the weakest stretch outside the pandemic in nearly 15 years.
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The fallout was swift. President Donald Trump abruptly fired Bureau of Labor Statistics Commissioner Erika McEntarfer, alleging — without evidence — that she manipulated the figures for political purposes. Economists note that revisions are a routine part of statistical reporting, not proof of foul play.
Trump’s nominee to replace her, E.J. Antoni of the Heritage Foundation, has already stirred controversy, with critics warning of political interference in data that underpins decisions on interest rates, business planning and household confidence.
For now, the bigger concern is whether the labor market — the bedrock of the American economy — can regain its footing. Job growth has slowed, layoffs are mounting, and households, long the drivers of consumer demand, are beginning to feel the strain. Friday’s report may not offer definitive answers, but it will show whether the cracks in the nation’s strongest pillar are beginning to widen.